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Voices: Tim Pagliara, on Discussing U.S. Economic Policy with Clients

Voices is an occasional column that allows wealth managers to address issues of interest to the advisory community.
Tim Pagliara
is chairman and chief executive of CapWealth Advisors in Franklin, Tenn.

We're at a critical juncture as a country when it comes to federal budgetary and debt issues. We've never had more Federal Reserve intervention in response to a financial crisis, yet we're still in the weakest recession recovery we've ever had. We've reached a point where the Fed has done everything thing they can.

As advisers we are uniquely qualified to join the discussions that are taking place in Washington over issues like debt, housing, and Social Security. What's more, we can lend our knowledge and expertise to help find solutions to these problems. There are very clear parallels, in terms of principles and behavior, between those personal budgets that we deal with and the U.S. budget. Those of us who have been practicing for years, have been dealing with budgets our entire lives; we understand the implications of long-term, unsustainable debt practices.

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The question then is how do we raise our voices? In what ways can we use our knowledge to help affect positive change? The first is by educating voters--namely our clients--and the second is by getting involved politically, ourselves.

It is average people who ultimately feel the effects of economic policy, which is why we have a duty to help our clients understand what these policies really mean and what's going on in Washington. Advisers are accustomed to explaining complex topics--this is an opportunity to help client's synthesize or interpret what can often be complicated information. Our clients are the people electing the representatives who make those policies, so it is critical that clients be informed about how it affects them.

Advisers who want to take an even more active role should consider volunteering on nonprofit boards and with charitable causes that help raise awareness about issues like fixing the debt or government-sponsored enterprises (GSE) reform. Or if you'd rather take a more direct approach, engage your representatives. Congressmen and senators are the ones making decisions for thousands of people, but they rarely have the kind of understanding or appreciation of how these issues actually affect their constituents in the way that financial professionals do.

So, advisers: Speak out. We're at a critical point in the road here. We have another few years to get our budget and economy going again. We need an economy that generates enough revenue to help pay for all the obligations we've created, and we have to take a hard look at those obligations and see what we can and cannot sustain. That isn't something that can happen over the next two decades; it needs to happen now.